Our Environment - Mining and the Environment: From Ore to Metal - page 317

in their work? (6) What is the relationship between these things and the wealth and pov-
erty of different human groups or communities in the host region?

How to Measure the Size of an Economy?

The way we usually measure the size of an economy is by Gross Domestic Product
(GDP). GDP is the value of all the goods and services produced within a country's bor-
ders in one year. This value is equal to the economic wealth of the country, all the things
of economic value, which can be bought or sold, that have been produced in one year.
This includes all goods such as food, merchandise, or minerals, as well as all services such
as labour, transportation, or accommodation. The total prices of these things combined
is the GDP. The GDP concept also applies to local economies. A mining project will
change the local and regional economy, often with notable effects on the host country's
GDP. The mine creates a surplus of goods (e.g. produced ore) and creates a wide range
of service and business opportunities (e.g. labour). Economic impacts may be small at the
national level, but they are always significant at the local and regional levels ( Case 7.8 ).
One of the drawbacks of the GDP number is that it excludes unrecorded economic
activity. Unrecorded transactions include the informal sector or subsistence production
(i.e. growing rice for own consumption). Also unrecorded in total GDP is work carried
out by members of society that contributes to production but which is not sold for money.
The classic example is housework performed mainly by women. Cooking, raising children
and housekeeping are all economic activities essential for producing wealth, but are not
included in GDP, unless they are remunerated and registered with government, such as
formal domestic work.
The GDP figure provides a snapshot of how large an economy is in any particular year,
but the economy is changing all the time. There are a huge variety of factors that influence
economic growth over the long run. These include economic factors (such as developing a
mine), but also all kinds of social, political, and even cultural conditions.

A mining project will change the
local and regional economy, often
with notable effects on the host
country's GDP.

CASE 7.8
Mining in Sumbawa

In 1996, Newmont commenced operation at its Batu Hijau
copper mine in Sumbawa, an island in the Province of NTT,
Indonesia. In 2006, ore production averaged 120,000 tons
per day, a production rate that ranks the Batu Hijau mine
amongst the biggest copper mines on Earth. All economic
sectors combined, the mine contributes most of the GDP of
Sumbawa. The mine is expected to continue operation until
2021. At the end of the mine life the mine will have domi-
nated the provincial economy over a quarter of a century, or
over one generation.